Google Favorite Places

Thank you for making the Law Office of E.C. Lewis, P.C. a favorite place with Google! According to Google, only “over 100,000 businesses were identified as Favorite Places, representing less than 1% of the 28 million U.S. businesses.” It is because of clients and referral sources like you that my law firm, a small business located in Denver, Colorado, has been able to become a favorite place! I look forward to working with all of you, my clients, friends, and business associates – new and old – over the next year and beyond to make sure that the Law Office of E.C. Lewis, P.C. becomes one of your favorite businesses too!

For companies and individuals whose income depends on software downloads or affiliate marketing, the talk recently has been on Colorado House Bill 1192 – a bill “concerning that state sales and use tax of standardized software.”  This bill repeals a regulation of the Department of Revenue related to the type of software that is currently taxable.  Currently, under Special Regulation 7, software must be in a tangible form to be taxed.  SR-7 specifically states “Software is not delivered to the customer in a tangible medium if it is provided through an application service provider, delivered by electronic software delivery, or transferred by load and leave software delivery.”  Due to this, in most cases if software is downloaded from the internet, the State of Colorado does not get any sales tax.

So what does this bill do?  It adds the language that tangible personal property (aka property that is taxed) will included standardized software (aka software that is created for more than one person/company to use) that is downloaded from the internet or delivered to person by some non-physical means (aka some means where you don’t actually get a CD with the software on it).  This means that every time someone in Colorado downloads something from the Internet, a tax should be levied on that purchase.

How does this affect Colorado businesses?  Well, if you are based in Colorado, it makes it where the State has a much easier time collecting the tax from your company.  Any company based in Colorado will be expected to account for, and pay, taxes on all software downloaded by Colorado residents.  This creates an accounting nightmare for companies who, if this bill passes, will need to determine what state every person who downloads their software lives in and then remit sales tax on these purchases.

While I understand that Colorado is facing a budget deficit, it does not make sense to pass a bill that will make if more difficult for companies to move or startup here.  When we as a state are supposedly trying to attract technology companies, any move to make doing business more difficult for them does not make sense.  Companies bring with them much more than just the tax dollars they generate on their products.  Companies bring tax dollars on the wages their employees eventually spend, tax dollars on the goods the company purchases, and foster an environment that makes more companies want to move to a state.

Later this week, I will post more on this bill and how it will affect affiliate marketers.  In the meantime, I suggest all my readers investigate this bill further and post comments on what they think about the bill.

As always, if you are a small business with questions about whether you are doing business correctly, you can reach me at 720-530-3405 or elizabeth.lewis@eclewis.com.

Recent Opinions on the Ethics of the Use of Social Media by Attorneys

Over the past few months, the buzz about social media has been hard to miss. Following the Haitian earthquake, CNN reported family members were connecting via Facebook and Twitter.  Celebrities such as Ashton Kutcher, who led a campaign to get over 1,000,000 followers on Twitter, use it to connect with fans. Even the Denver Bar Association has a Fanpage on Facebook to disseminate information to its members.

Just as individuals, celebrities, and businesses are using it to connect with friends, fans, and clients, attorneys are also starting to use it for professional and social development. However, as their use increases, so do the questions about how to ensure that use complies with the Rules of Professional Conduct. Several states have issued opinions with varying degrees of admonition to the attorneys and judges who have used sites like Avvo, Facebook, and LinkedIn incorrectly in the eyes of the regulating bodies.

Two recently published Ethics Advisory Opinions regarding the use of social media by attorneys have come from Florida and South Carolina. The first was the Florida Judicial Ethics Advisory Committee Opinion 2009-20 issued November 17, 2009. In this opinion, Florida answered the question whether a judge may “friend” an attorney who may appear in his court on a social networking site such as Facebook. Florida determined that by being a “friend” of a judge on Facebook, the appearance was that the “friend” might be in a position to influence the judge. Fearing the appearance of impropriety by the general public, Florida determined that if a site required the approval of a person as a “friend” by a judge, such as Facebook, that the judge may not accept the request from anyone who may appear in his courtroom. This opinion did state, however, that if no action was required by a judge then this was not unethical (for instance, some elected judges create “Fanpages” on Facebook for political supporters and cannot control who does or does not become a fan). It is worth noting that there was a minority that stated that the term “friend” online did not mean someone was in a position to influence a judge but rather just a social acquaintance and that they did not agree with the full opinion.

The second opinion affecting online social networking is South Carolina’s Ethics Advisory Opinion 09-10 issued last fall. In this opinion, South Carolina answered questions about the use of websites that list and allow reviews of attorneys. Specifically, the site in question allowed an attorney to “claim” his profile and ask for recommendations from other attorneys and clients (with most people believing that the website in question was avvo.com although not specifically mentioned). However, the site did not allow attorneys, even those who claim their profiles, to control who recommended them or what was said in these recommendations, much like the websites Avvo.com and Linkedin.com and, perhaps the better know, Martindale-Hubbell and SuperLawyers. Reviewers could also post recommendations, or complaints, about an attorney anonymously without any control by the attorney. As any information posted on a “claimed” website was determined to be an advertisement, whether written or controlled by the attorney or not, South Carolina stated that it must conform to their Rule 7.1 and 7.2. Further, South Carolina even stated that if a someone wrote an endorsement of an attorney, it was the attorney’s responsibility to “counsel the client to conform the advertisement to the Rules of Professional Conduct and that, if the client refused, the lawyer’s continued representation of the client may imply the lawyer’s authorization or adoption of the advertisement” violating the Rules.

Much discussion has come from these opinions both online and offline with attorneys that use social media. In an ABA Journal article, one attorney was baffled that in the eyes of South Carolina’s ethical panel, he was responsible for not only what he said but also what non-clients said on a website (as one cannot determine whether it is really a client who posted a recommendation or not). Should the opinion be expanded, it could be the death sentence for attorneys using sites such as LinkedIn to help grow their employment opportunities. Regarding the Florida opinion, should other jurisdictions follow suit, the outcome could be devastating for both the professional and social development of attorneys and judges. For instance, a longtime law firm colleague may find she has to “unfriend” her prior colleagues once she takes on judicial robes if those former colleagues may appear in her court.

Although Colorado has not specifically regulated attorneys use of social media networks, attorneys who use social media for both professional and client development must be aware of the developments in other jurisdictions and the interplay of our Colorado Rules of Professional Ethics on the use of social media networks. This article only mentioned two of the many issues that have arisen in the past few years. For instance, it doesn’t even touch on: whether if you list practice areas under the “specialty” section of your LinkedIn profile you violate Rule 7.4 (many say yes if you don’t have a disclaimer), whether if researching an opposing party online could create issues if the lawyer misleads someone about his identity under Rule 4.1 (most say yes if you lie about who you are), or whether if saying you are having lunch with a perspective client on Twitter can be seen as breaching client confidentiality under Rule 1.6 (again, probably yes). As the role of social media and online marketing expands, whether Colorado will begin to create new regulations, or apply the regulations we already have to the emerging media, remains to be seen. However, the opinions issued in both Florida and South Carolina serve as a word of caution to all attorneys who use social media to review their profiles, postings, and other content to ensure that it is in line with the Colorado Rules of Professional Conduct and the rules of any other jurisdictions in which they are licensed.

New Media Legal Questions with Attorney Elizabeth Lewis at http://www.eclewis.com brought to you by http://www.iGrandma.TV.

The first question to ask is why is the sole proprietor a sole proprietor to begin with. Is the business a small business on the side (such as someone that sells Avon or Mary Kay products and only makes several hundred dollars a month)? When the business owner started, did he or she set it up as a sole proprietorship because he or she didn’t have enough money (or know the right people) to find out whether it should be set up that way? These questions may help a business attorney determine whether the sole proprietorship was correct when the business started and whether it remains appropriate.

The second is whether forming a more formal entity would help decrease any legal liability on behalf of the owner. Is the business a high liability business (and the result could surprise even the business owner)? Is the business one that has a high chance of failure? Is the business one that will have multiple owners, some of whom may not want to materially participate in the business? These questions may help a business attorney determine whether the sole proprietorship was correct when the business started and whether it remains appropriate.

The third is whether forming a more formal entity would help decrease any tax liability on behalf of the owner. Is the business owner paying too much employment tax? Would forming a more formal entity cause the business owner to pay capital gains or some other tax actually hurting him or her?

In addition to these concerns, there are many other concerns to look at. For instance, questions about the record keeping capabilities of the business owner, the business owner’s estate plan, and the long-term goals of the business owner are a few to think about.

When considering whether it is time to change business entities, the sole proprietor should always consult a qualified business attorney who can help guide him or her through the legal and tax ramifications of the choices that he or she has.

If you are a business owner who wants to make sure your business is structured correctly, call your Denver business attorney Elizabeth Lewis at 720-530-3405 or email her at elizabeth.lewis@eclewis.com today.

As always, this article is for informational purposes only and does not contain legal or tax advice. Please consult with your attorney or accountant for legal or tax advice to ensure a great 2010!

As a former English colony, the United States adopted what is known as a “common law” legal system.* Common law refers to the idea that our law is based on the prior interpretation of laws by the courts. Each judge or jury, in theory, is to look at past precedent (cases that have already been settled) and determine if it should be used in the case at hand. (See here for more on being on a jury!) Simplistically, precedent ideally is based on local law, i.e. in Colorado state courts, precedent would be the rulings that had been reached in the Colorado Court of Appeals or the Colorado Supreme Court; in Colorado federal courts, precedent would be the rulings of the 10th Circuit. In the United States, except in limited circumstances, what has been decided by the United States Supreme Court is the highest precedent for all courts.

So with that background, you are probably asking yourself, why the heck does England’s law matter here? I mean, really, we haven’t been an English colony for over 200 years. Why that is true, in order to help a court reach a decision in a case, attorneys write what are called briefs or motions – an outline of the law that applies to their case. When there is not precedent in the local jurisdiction, attorneys sometimes look to other jurisdictions or even other countries’ laws. They may also cite what other countries are doing to show a majority of countries are changing their ways on certain issues. All of this is with the hope of influencing the court to make a decision one way or the other if there isn’t in precedent (or an attorney wants the court to decide differently than precedent) regarding the matter at hand.

In addition to being used as precedent, sometimes politicians point to other countries to help strengthen their position on laws that they introduce. Although courts look to common law to interpret laws, if there is a law passed that changes common law, the new law, and not common law, is the law of the land. Therefore, even if other countries’ laws do not influence the court systems, they can influence the legislative process. (A good example of this is the current health care debate. Many politicians argue that we are one of only a few Western countries without government health care. Although this won’t influence the courts, it can potentially influence the legislative process.)

So there, in a very, very, very brief nutshell is why foreign laws can matter in the US. Stay tuned to learn a little more about the Digital Economy Bill!

* Well, most of the US. Because Louisiana is a former French colony, Louisiana uses what is called constitutional law in many instances. For a brief look at the type of law used in Louisiana, please click here.

Several of the issues raised I discussed on my blog about in the past few posts. However, several questions were asked that I have not posted about (or at least haven’t recently posted about) and a short discussion of them is in order.

The first question that was raised was about creating contests and other promotional events using the web. While it is important that anyone creating contests have a clear terms of entry that covers what rights the contest holder gets to the entries, when a third party is going to be used to host the material, the terms of use of the third party must also be clearly understood. With the advent of websites like Flickr, YouTube, and Facebook, more parties are using these mediums to host their contests and promotional events. However, by using these sites, the parties are not only agreeing to the terms of use of these sites for themselves, but potentially the contest entrants to. Therefore, when developing both the contest and the terms of service, it is important to make sure that the attorney developing the terms of services has been told that a third party is also going to be used.

The second question that was raised was about how to ensure that small companies have the correct procedure in place to stop information from being released by employees. Although I dealt with this in an earlier post, I thought revisiting this issue was a good idea. First, having an attorney help develop a communications policy doesn’t have to be expensive. Attorneys experienced in online and internet issues can integrate these policies into employment contracts and independent contractor agreements – both of which are probably documents that small companies should have created anyway (of course, small companies need to consult their attorneys to be sure that these documents are necessary). Attorneys experienced in this can also help companies draft policies and instruct management how to make sure the policies are followed. Although this may not be super cheap, it is a lot cheaper than having the company brand hurt by an unintentional post by an employee.

Again, I loved presenting to the MHSMC and thought the questions asked were great.

For the rest of the week, please look forward to a post on judges banning twitter in the courtroom and the Digital Economy bill pending in England.

The Large Company

The large company faces multiple issues – such as dealing with agencies like the SEC, developing employee policies, and following truth in advertising rules. Large companies, especially those that are either publicly traded or thinking about going public, need to worry about publishing information that goes afoul of SEC rules. For instance, having an employee that publishes information regarding profit forecasts on twitter, even if unauthorized, may cause issues for the company. Because of this, large companies also have to worry about what their employees say, both in and out of work. Therefore, it is important to have a written policy on social media and other communications in general.

Although these issues may also be faced by medium sized companies, the large business may have a more difficult time dealing with this issues. One reason is monitoring 20 employees and communicating policies such as what can and cannot be posted on social media sites, and monitoring that employees are following it, is easier than monitoring and communicating policies to 500 employees.

Because of this, large companies need a written employee communication policy that covers both what can be said verbally and electronically. These policies should incorporate social media policies and address and special circumstances (i.e. if there are additional rules imposed by HIPAA or other laws that may apply). Large companies should also have either an in-house counsel or outside counsel that is familiar with SEC and FTC compliance issues to make sure both employees and upper management (i.e. board members) are counseled on what can and cannot be said regarding the company.

The Small Company

Small companies can usually internally ensure that employees, especially if there are only one or two employees, follow the policies that the owner wants. Small companies are also, typically, less concerned with releasing information that may violated the SEC rules (unless of course, small companies are looking to sell shares then it may be an issue). Because of this, depending on the number of employees, small companies may have an informal policy, unlike large companies that need written formalized policies, that is crafted with the help of an attorney to ensure that employees know what they can and cannot talk about (and the owners know too).

However, as small companies typically do not have in-house consul, small companies may have more problems ensuring that they follow advertising rules. Therefore, they need to make sure they have been counseled on what is, and isn’t, deceptive advertising. Depending on the company’s line of business, there may also rules and regulations that the company needs to follow (i.e. insurance, accounting, health, etc). By knowing the rules that govern the type of industry the company is in, a company can help make sure it is compliance with the rules.

If you find that the above post interests you, I invite you to come and listen to the Mile High Social Media Club presentation Thursday, November 19th at Strings in Denver at which myself and two other individuals will be on a panel discussing these types of issues. You can RSVP for the event at http://novembermhsmc.eventbrite.com.

1. Watermark your work. If you are placing something like a drawing, cartoon, or photograph online, you can put a watermark on your picture to make it so that people may be less likely to steal the work (since your watermark will be on it). In addition, if it is stolen, it will be easier to prove (as long as the watermark isn’t removed somehow).
2. Post only part of your work online. If you are placing something like a novel or song online, you can put only part of it online and then send the full work by email (and you can charge for the full work if you are enterprising). Although this won’t guarantee that the work won’t be placed online by someone else equally as enterprising, you will have a record of who received copies and a note with the copy you send them may deter the person from placing the work online (something nice yet professional stating you have a copyright on the work).
3. Place smaller versions of your work online. If you are placing images online, you can put thumbnails online rather than larger files. By doing this, the work may be high enough quality to show your audience what you can do, put low enough resolution that someone else may not want to take it.
4. Read Terms of Services. If you are placing IP anywhere except your website, make sure you know who owns the rights to the IP by placing it on the site. The last thing most artists want is to find out that by placing a photo or article on a site means they have given up rights in that work.

Even if you use best practices for putting things online, if it is something that people want, there is a chance it will be taken and used somewhere else. If you find out your work on a site with a copyright policy, such as Facebook, MySpace, Google, or Yahoo, you should contact the site and ask them to remove it. In any case, if your work is something that is likely to be stolen (i.e. professional photographs, novels), it is a good idea to register your works with the U.S. Copyright Office. (I say this because you may not want to pay for a copyright on every photo you take on that trip to your grandmother’s house, but that is a call you should make with the help of your attorney.) By registering your work, if someone does steal it, it increases the amount of damages you may be eligible for and be able to get attorney fees.
If you find that the above post interests you, I invite you to come and listen to the Mile High Social Media Club presentation Thursday, November 19th at Strings in Denver at which myself and two other individuals will be on a panel discussing these types of issues. You can RSVP for the event at http://novembermhsmc.eventbrite.com.

So who owns the IP to begin with? Many people think because they create something, they own it. For instance, a graphic artist may think because he created a logo that he owns the logo. However, he may not. There may be a clause in the contract he has with his client giving ownership to his client. It could also be that the work would be considered a work for hire, again, with the client owning it if the contract doesn’t specify. However, it could also be the graphic artist owns it if the contract states so or if the work does not fall under the work for hire doctrine. In addition, there is also a question if the person that originally owns it has given any rights to the IP to someone else. For instance, in the case of an author, did the author give a publisher the rights to the book in return for publishing it? It is only once one establishes who owns the IP prior to someone placing it on a social network that someone can start to establish who has rights to it after it is placed on the site.

So how does one go about figuring out who has rights to the IP after it is placed on a social network? The answer usually lies in the website’s terms of service. To determine if the owner of the IP has given any rights in the IP to the social media site just by placing it on the site, a careful reading of the site’s TOS both at the time it was placed on there and any updates or changes in the TOS since then is necessary. By just placing IP on some websites, users give a license to the website to use their IP for various things and for various amounts of time. A TOS may say that a user gives a limited use in the IP to the site. For instance, the TOS may say the site can use the IP in any way it wants why the IP is on the site, including in advertisements. A TOS may also give an unlimited use license in the IP once it is placed on the site. This would mean that the site could use it for any reason even after the user removes it.

So the short answer is to who owns the IP on a social network is, as lawyers like to say, it depends. To figure out who owns it, it is important to find out who owned the IP first and then to look at what the TOS states.